Citizens Utility Board of Michigan

Credit: Matthew Paul Argall. Licensed through Creative Commons.

CUB has been arguing for years that a key part of the solution to Michigan’s problem of poor electric reliability and high energy costs for customers has to be performance-based regulation: rules that hold utilities accountable by financially penalizing them if they fail to perform well on metrics like the number of outages. Now, the Michigan Public Service Commission (MPSC) is taking some of its most concrete steps yet to create performance-based regulation in Michigan.

New expert witness testimony filed in DTE’s latest electric rate case exposes how the utility’s proposed rate hike, one of its biggest ever, does not deliver value to customers and fails to take the steps needed to turn around DTE’s abysmal record on reliability.

The Michigan Public Service Commission (MPSC) held three town hall meetings this week where they heard hours of testimonials, many of them filled with outrage, about the recent severe power outages. Along with the Michigan House committee hearing last week and a Michigan Senate committee hearing on March 23, the response to the performance of DTE Energy and Consumers Energy during and after the storms continues to be eventful. Before we get into the meetings, we highly recommend anyone interested in these issues read this recent story in the Detroit Free Press by Keith Matheny, which gives a great overview of the data CUB has presented showing that the poor reliability in Michigan is likely the result of the utilities’ performance, and this recent MLive story by Sheri McWhirter, which details the audit the MPSC is planning that will confirm the root causes of Michigan’s reliability problems. 

After the recent severe power outages across southeast Michigan, many Michigan lawmakers called for answers from DTE and Consumers Energy for their unacceptably poor electric service. The first major step in getting those answers came at a lengthy hearing of the Michigan House Energy, Communications and Technology Committee on March 15. Among those who testified were representatives of DTE and Consumers Energy, residents telling powerful stories about how power outages have affected their lives and Commissioner Katherine Peretick of the Michigan Public Service Commission (MPSC).

Despite the variety of backgrounds, a common theme among those testifying was accountability. Who are the utilities accountable to when the power continually goes out? Is it their customers? Their shareholders? Regulators? And how should they be held accountable going forward?

CUB of Michigan has been insistent for years that the biggest barrier to improving reliability is the lack of accountability for utilities for their poor performance. Questions asked by several members of the committee showed that those lawmakers are sick of excuses by the utilities and want to take action. 

Source: JK Nair

In its newest rate case, filed earlier this month, DTE, the largest electricity provider in Michigan, proposes a 13.9% residential rate increase. That rate hike is among the biggest proposed by a Michigan utility in the past several years, but it also represents a slap in the face to DTE customers, as well as the Michigan Public Service Commission (MPSC). 

Michigan Attorney General Dana Nessel is urging state regulators to open up lobbying activities by utilities to more oversight and transparency by instituting a slate of much-needed reforms that would help groups like CUB counteract the influence that utilities have had on the political and ratemaking process — often to the detriment of ratepayers.

In December, CUB released its latest edition of the annual Utility Performance Report. We already did a blog post summarizing some of the major findings in that report, but now we’d like to touch upon another area of the report that seems relevant given Gov. Whitmer’s recent State of the State address: the environmental impacts created by Michigan’s utilities when they produce energy, and how those impacts compare to utilities in the rest of the country.

Source: Dori. License.

The electric grid is changing quickly, moving away from a centralized system of thermal power plants to a more distributed and renewable grid. One of CUB’s priorities is to make sure utility customers get a fair share of the benefits of this process or change, while also not having to cover an undue amount of the costs. 

A perfect example of how that process is playing out is going on right now at the Midcontinent Independent System Operator (MISO), the organization that operates the electric grid for most of the Midwest and central U.S., including most of Michigan. CUB of Michigan, representing public consumer advocates, recently submitted comments on a proposed rule change for MISO that could help preserve reliability as the type of electricity generation sources in MISO’s region continues to shift. So far, it appears that MISO is receptive to the ideas we suggested to make their proposal better, and we believe consumers will benefit as a result.

Photo by Brendan Wood, licensed under Creative Commons Attribution-ShareAlike 2.0

Good news for Michigan utility customers! In a November post we explained the eyebrow-raising proposal from DTE to sell customers on a program where they could prepay a fixed amount for their electricity service, but be suddenly disconnected from service if the prepaid amount ran out. At its last meeting of 2022, on Dec. 21, the Michigan Public Service Commission (MPSC) denied DTE’s proposed program and also refused DTE’s request to waive several important consumer protection rules that would have stood in the way of the program.

This year utility customers in Detroit protested shabby treatment by DTE. Lawmakers said the problem of unaccountable utility companies is big enough that consumers need more protection and introduced bills to create new laws that would penalize utilities and compensate customers for long power outages.

Is the service from Michigan’s utilities really that bad? Are these reactions exaggerations? For each of the last few years, CUB has put out its Utility Performance Report to put context around the service that Michigan utility customers receive (Last year’s report available here).